More and more people in the US are living in poverty - yet Mitt Romney's policies would further shred the safety net.

About the Author

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley. He has served in three US administrations, most recently as secretary of labor under President Bill Clinton. He has written thirteen books, including his most recent, Aftershock.

Story highlights

January’s increase in hiring is good news, but it masks a bigger and more disturbing story - the continuing downward mobility of the American middle class.

Most of the new jobs being created are in the lower-wage sectors of the economy - hospital orderlies and nursing aides, secretaries and temporary workers, retail and restaurant. Meanwhile, millions of Americans remain working only because they’ve agreed to cuts in wages and benefits. Others are settling for jobs that pay less than the jobs they’ve lost. Entry-level manufacturing jobs are paying half what entry-level manufacturing jobs paid six years ago.

Other people are falling out of the middle class because they’ve lost their jobs, and many have also lost their homes. Almost one in three families with a mortgage is

Job seekers have been having better luck recently, but most new jobs in the US are in lower-wage sectors [AFP]

Berkeley, CA - January's increase in hiring is good news, but it masks a bigger and more disturbing story - the continuing downward mobility of the middle class in the US.

Most of the new jobs being created are in the lower-wage sectors of the economy - hospital orderlies and nursing aides, secretaries and temporary workers, retail and restaurant. Meanwhile, millions of US workers remain in jobs only because they've agreed to cuts in wages and benefits. Others are settling for jobs that pay less than the jobs they've lost. Entry-level manufacturing jobs are paying half what entry-level manufacturing jobs paid just six years ago.

Fault Lines: The top one per cent

Other people are falling out of the middle class because they've lost their jobs, and many have also lost their homes. Almost one in three families with a mortgage is now metaphorically underwater, holding their breath against imminent foreclosure.

The percentage of those in poverty in the US is its highest in two decades, and more of us are impoverished than at any time in the past 50 years. A recent analysis of federal data by the New York Times showed the number of children receiving subsidised lunches rose to 21 million in the last school year, up from 18 million in 2006-2007. Nearly a dozen states experienced increases of 25 per cent or more. Under federal rules, children from families with incomes up to 130 per cent of the poverty line, $29,055 for a family of four, are eligible.

Experts say the bad economy is the main factor driving the increase. According to an analysis of census data by the Center for Labor Market Studies at Northeastern University, 37 per cent of young families with children were in poverty in 2010. It’s likely that rate has since worsened.

Mitt Romney says he's not concerned about the very poor because they have safety nets to protect them. He says he's concerned about the middle class. Romney doesn't seem to realise how much of the middle class is becoming poor.

But Romney doesn't like safety nets to begin with. He's been accusing President Obama of inviting a culture of dependency. "Over the past three years, Barack Obama has been replacing our merit-based society with an entitlement society," he says over and over, arguing that our economic problems stem from a sharp rise in dependency. Get rid of these benefits and people will work harder.

He and other Republicans point to government data showing that direct payments to individuals have shot up by almost $600bn since 2009, a 32 per cent increase. And 49 per cent of US residents now live in homes where at least one person is collecting a federal benefit, such as food stamps or unemployment insurance, up from 44 per cent in 2008.

"A record and growing percentage of the unemployed have been jobless for six months or more."

But Romney and other Republicans have cause and effect backwards. The reason for the rise in benefits is that US workers got clobbered in 2008 and many are still sinking. They and their families need whatever help they can get.

The real scandal, as I've said before, is that the nation's safety nets are too small, and many slip through the holes. Only 40 per cent of the unemployed qualify for unemployment benefits, for example, because they weren't working full-time or long enough on a single job before they were let go. The unemployment system doesn't recognise how many in the US work part-time on several jobs, and move from job to job.

And even those who are lucky enough to be collecting unemployment benefits are about to lose them. A record and growing percentage of the unemployed have been jobless for six months or more, and Republicans in Congress are unwilling to extend their benefits.

Romney's budget proposals would shred safety nets even further. According to an analysis by the Center on Budget and Policy Priorities, his plan would throw ten million low-income people off the benefit rolls for food stamps or cut benefits by thousands of dollars a year, or some combination thereof. "These cuts would primarily affect very low-income families with children, seniors and people with disabilities," the report concludes.

At the same time, Romney's tax plan would boost the incomes of the most wealthy citizens in the US, who are already taking home an almost unprecedented share of the nation's total income. Romney wants to permanently extend George W Bush's tax cuts, reduce corporate income tax rates, and eliminate the estate tax. These tax cuts would increase the incomes of people earning more than a million dollars a year by an average of $295,874 annually, according to the nonpartisan Tax Policy Center.

By reducing government revenues, Romney’s tax cuts would squeeze programmes for the poor even further. Extending the Bush tax cuts will add $2tn to the nation's budget deficit in just two years. That's the same as the amount that's supposed to be saved by automatic spending cuts scheduled to start next year - which, by the way, will hit the poor especially hard.

Oh, I almost forgot. Romney and other Republicans also want the repeal of Obama's healthcare law, thereby leaving 30 million Americans without health insurance.

The downward mobility of the country's middle class is the big news, but the GOP apparently hasn't heard about it. Maybe it's too hard to hear about from that far away - and Mitt Romney is certainly far away. His unearned income in the past year alone was more than $20m. That's about as much as the combined earnings of a thousand families at or just above the poverty line.

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written thirteen books, including The Work of Nations, Locked in the Cabinet, Supercapitalism, and his most recent, Aftershock. His "Marketplace" commentaries can be found on publicradio.com and iTunes. He is also Common Cause's board chairman.

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